A workforce crunch awaits mature economies

The COVID-19 pandemic has resulted in a decline in birthrates in many countries around the world, including the United States and China, according to recent media reports. However, the prospect of any resulting population crunch is of more immediate concern than these new fertility data suggest. Indeed, in many mature economies, more people are now exiting the workforce than entering it.

This disconcerting trend can be seen using UN population statistics. The ratio of older people exiting their working years (60 to 64 year-olds) to younger people entering their working years (15 to 19 year-olds) is a good bellwether for the health of a nation’s workforce. A reading above one indicates a contracting workforce (more exits than entrants) and a reading below one indicates an expanding workforce (more entrants than exits). According to our calculations, this ratio shows that many mature economies, including South Korea and numerous European nations, are on the cusp of a workforce crunch. Meanwhile, in many emerging markets, the working-age population is projected to grow rapidly.

As large global companies formulate future production and marketing plans understanding these kinds of demographic trends is essential. Be on the lookout for a new report from The Conference Board’s Labor Market Institute on the Global Labor Market Outlook in the near future.